TRANS WORLD ENTERTAINMENT
CORPORATION
FORM OF RESTRICTED STOCK AGREEMENT

This Restricted Stock Agreement, dated as of , 1995 (the "Agreement"), is made by and between Trans World Entertainment Corporation, a New York corporation (the "Company"), and (the "Employee").

WHEREAS, the Employee has been designated by the Compensation Committee of the Company's Board of Directors (the "Committee") to participate in the Trans World Entertainment Corporation 1990 Restricted Stock Plan (the "Plan"), which the Employee acknowledges receipt of;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows.

Capitalized terms used herein and not defined shall have the meanings set forth in the Plan.

(a) The listing, or approval for listing upon notice of issuance, that may be required of such shares on any securities exchange as may at the time be the principal market for the shares;

(b) Any registration or other qualification of such shares under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification or an exemption therefrom supported by an opinion of counsel, which the board of directors shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable, including expiration of any requisite holding period under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"); and

(c) The obtaining of any other consent, approval or permit for any state or federal governmental agency which the board of directors shall, in its absolute discretion based upon the advice of counsel, determine to be necessary or advisable.

4. Legend on Restricted Stock. All certificates representing shares of Restricted Stock, unless such shares are registered under the Securities Act, shall bear the following legend or such other legend as the Company deems appropriate:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF SUCH REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS AND VESTING CONDITIONS SET FORTH IN A RESTRICTED STOCK AGREEMENT MAINTAINED WITH THE SECRETARY OF THE COMPANY.

Any certificate issued at any time in exchange or substitution for any certificate bearing such legend or such other legend deemed appropriate by the Company shall also bear such legend unless, in the opinion of counsel for the Company, the securities represented thereby need no longer be subject to the restriction contained herein. The provisions of this Section 4 shall be binding upon all subsequent holders of certificates bearing the above legend.

If to the Company: If to the Employee:

Trans World Entertainment Corporation
38 Corporate Circle
Albany, New York 12203
Attn.: Secretary

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

Trans World Entertainment                   -----------------------------
      Corporation                              [Print Name of Employee]

By:   /s/Robert J. Higgins
    ------------------------------          -----------------------------
    Robert J. Higgins, Chairman
    and Chief Executive Officer

Following are the officers and directors of the Company which executed the indemnification agreement attached herein as exhibit 10.2:

Robert J. Higgins, Chairman of the Board, President, CEO & Director Matthew H. Mataraso, Secretary and Director George W. Dougan, Director
Charlotte G. Fischer, Director
Isaac Kaufman, Director
Edward W. Marshall, Jr., Executive Vice President-Operations John J. Sullivan, Senior Vice President, Chief Financial Officer Bruce J. Eisenberg, Senior Vice President-Real Estate Paul A. Cardinal, General Counsel Scott Schoendorf, Vice President-Management Information Systems

TRANS WORLD ENTERTAINMENT CORPORATION
INDEMNIFICATION AGREEMENT

This Indemnification Agreement, dated as of May 1, 1995 (the "Agreement"), is made by and between Trans World Entertainment Corporation, a New York corporation (the "Company"), and ______________ (the "Indemnitee").

WHEREAS, the Indemnitee is currently serving as an officer or director of the Company and the Company wishes the Indemnitee to continue in such capacity; and

WHEREAS, the Company believes that it is unfair for its directors and officers to assume the risk of huge judgments and other expenses which may occur in cases in which the director or officer received no personal profit and in cases where the director or officer was not culpable; and

WHEREAS, the Company recognizes that the issues in controversy in litigation against a director or officer of a corporation such as the Company are often related to the knowledge of the essential facts and exculpating circumstances regarding such matters, and that the long period of time which usually elapses before the trial or other disposition of such litigation often extends beyond the time that the director or officer can reasonably recall such matters; and may extend beyond the normal time for retirement for such director or officer with the result that he, after retirement or in the event of his death, his spouse, heirs, executors or administrators, may be faced with limited ability and undue hardship in maintaining an adequate defense, which may discourage such a director or officer from serving in that position; and

WHEREAS, based upon their experience as business managers, the Board of Directors of the Company has concluded that, to retain and attract talented and experienced individuals to take the business risks necessary for the success of the Company, it is necessary for the Company to contractually indemnify its directors and officers, and to assume for itself maximum liability for expenses and damages in connection with claims against such directors and officers in connection with their service to the Company, and has further concluded that the failure to provide such contractual indemnification could result in great harm to the Company and the Company's shareholders; and

WHEREAS, the Board of Directors of the Company has adopted by-laws (the "By-Laws") providing for the indemnification of the officers and directors of the Company to the fullest extent permitted by the Business Corporation Law of the State of New York, as amended from time to time (the "BCL"); and

WHEREAS, in recognition of the Indemnitee's need for substantial protection against personal liability and the Indemnitee's reliance on the aforesaid By-Laws, and in part to provide the Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to the Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors of change of control of the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to the Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement; and

WHEREAS, Section 721 of the BCL specifically provides that the indemnification provisions of the BCL are not exclusive and contemplates that agreements may be entered into between the Company and its directors or officers with respect to their indemnification, and this Agreement is entered into pursuant to such Section 721.

NOW, THEREFORE, in consideration of the Indemnitee's service as an officer or director of the Company after the date hereof, the parties hereto agree as follows:

"Board" shall mean the Board of Directors of the Company.

"Change of Control" shall mean any of the following events as determined in good faith by the Indemnitee:

(a) the merger or consolidation of the Company with, or the sale of all or substantially all of the assets of the Company to, any Person or entity or group of Persons or entities acting in concert; or

(b) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or

(c) a Person or group of Persons acting in concert (other than a Permitted Holder) becomes the beneficial owner of 35% or more of the Voting Stock of the Company, unless at such time a Permitted Holder beneficially owns an amount of Voting Stock of the Company greater than the amount so held by such Person or group; or

(d) a majority of the Board is replaced within any two-year period, excluding replacements due to resignations initiated by the incumbent Board or resignations due to the death or disability of any members of the incumbent Board.

"Corporate Status" shall mean the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other Enterprise which such person is or was serving at the request of, for the convenience of, or to represent the interests of the Company or a Subsidiary of the Company as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise; or the status of a person who was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Company or a Subsidiary of the Company, or the status of a person who was a director, officer, employee or agent of another enterprise at the request of, for the convenience of, or to represent the interests of such predecessor corporation.

"Dispute" shall mean any of the following events:

(a) a determination is made pursuant to Section 4 that the Indemnitee is not entitled to indemnification under this Agreement;

(b) the determination of entitlement to be made pursuant to Section 4 has not been made within 60 days after receipt by the Company of the request for indemnification; or

(c) payment of indemnification or advancement of Expenses is not made pursuant to Section 6 within 20 days after receipt by the Company of a written request therefor.

"Enterprise" shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

"Expenses" shall mean all direct and indirect costs of any type or nature whatsoever actually and reasonably incurred by the Indemnitee including but not limited to all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery fees, costs associated with the procurement of surety bonds or loans or other costs associated with the stay of a judgment, penalty or fine, and all other disbursements or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

"Good Faith" shall mean the Indemnitee having acted in good faith for a purpose which he reasonably believed to be in, or, in the case of service for any other Enterprise, not opposed to, the best interests of the Company and, in criminal Proceedings, in addition, having had no reasonable cause to believe that his conduct was unlawful.

"Indemnified Amounts" shall have the meaning set forth in Section 6.

"Independent Counsel" shall mean a law firm that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or the Indemnitee in any matter or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee's rights under this Agreement.

"Non-Party Director" shall mean a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee.

"Permitted Holder" shall mean collectively Robert J. Higgins and his estate, spouse, his four children on the date hereof, his heirs, legatees, and legal representatives, and any bona fide trust of which one or more of the foregoing are the sole beneficiaries or the grantors thereof and over which trust one or more of the foregoing acts as trustee and possess the power to direct the management thereof.

"Person" shall mean an individual, partnership, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof.

"Proceeding" shall include any action (including an action by or in the right of the Company), suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other actual, threatened or completed proceeding whether civil, criminal, administrative or investigative, other than one initiated by the Indemnitee.

"Subsidiary" shall mean, for the purpose of this Agreement, any corporation of which more than 50% of the outstanding voting securities is owned directly or indirectly by the Company, by the Company and one or more other subsidiaries of the Company, or by one or more other subsidiaries of the Company.

"Voting Stock" shall mean securities or other interests which entitle the holders thereof ordinarily, in the absence of contingencies, to elect the directors of the Company (or Persons performing similar functions).

in connection therewith. The termination of any claim, issue or matter in such Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter, provided that there is a finding (either adjudicated or pursuant to Section 4 or 7) that the Indemnitee acted in Good Faith and is fairly and reasonably entitled to indemnity for such portion of the settlement amount and expenses as a court of competent jurisdiction deems proper.

(i) If a Change of Control has occurred, unless the Indemnitee shall, in the Indemnitee's sole discretion, request in writing that such determination be made in accordance with clause (ii) of this
Section 4(b), the determination shall be made by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee;

(ii) If a Change of Control has not occurred, subject to Section 4(d), the determination shall be made by the Board acting by a majority vote of a quorum consisting of Non-Party Directors. In the event that a quorum consisting of Non-Party Directors is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, the determination shall be made by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee.

(i) If a Change of Control has not occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel which has been selected.

(ii) If a Change of Control has occurred, the Independent Counsel shall be selected by the Indemnitee and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel which has been selected.

(iii) Following the initial selection described above, the Indemnitee or the Company, as the case may be, may, within seven days after such written notice of selection has been given, deliver to the other party a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel selected does not meet the requirements of "Independent Counsel" (as defined in Section 1), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person, persons or entity selected shall act as Independent Counsel. If such written objection is made, the Independent Counsel selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit.

(iv) Either the Company or the Indemnitee may petition any court of competent jurisdiction if the parties have been unable to agree on the selection of Independent Counsel within 20 days after submission by the Indemnitee of a written request for indemnification pursuant to
Section 4(a). Such petition may request a determination as to whether an objection to the party's selection is without merit or seek the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate. A person so appointed shall act as Independent Counsel under Section 4(b).

(v) The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to this Agreement, and the Company shall pay all reasonable fees and expenses incident to the procedures of this
Section 4(c), regardless of the manner in which such Independent Counsel was selected or appointed.

(vi) Upon the due commencement of any judicial proceeding pursuant to
Section 7, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

had the right to commence such proceeding pursuant to this Section 7. The Company shall not oppose the Indemnitee's rights to seek any such adjudication or award in arbitration. In any such proceeding or arbitration, all of the provisions of Section 8 shall apply.

(b) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(b) All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an agent of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of the fact that indemnitee was serving in the capacity referred to herein.

(c) The Company shall require any successor to the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

If to the Company to:

Trans World Entertainment Company
38 Corporate Circle
Albany, New York 12203

Attention: President

with copies to:

Matthew Mataraso, Esq.
111 Washington Avenue
Albany, New York 12210

If to the Indemnitee, to the address shown under the Indemnitee's signature below,

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that change of addresses shall be effective only upon receipt.

(b) The Company shall use its best efforts to establish and maintain D&O Insurance in reasonable amounts from established and reputable insurers, but the Company's obligation shall not be enforceable against it if the Company

determines in good faith that such insurance is not reasonably available, that the premium costs for such insurance are disproportionate to the amount of coverage provided or to the premiums paid by other corporations similarly situated, that the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or that the Indemnitee is covered by similar insurance maintained by a subsidiary of the Company or other party. The Company shall be under no obligation to notify the Indemnitee that D&O Insurance may not be in force at any particular time.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

Trans World Entertainment Corporation

By: /s/Robert J. Higgins
   ---------------------------------------
  Robert J. Higgins, Chairman of the
  Board and Chief Executive Officer

INDEMNITEE

Address: ------------------------------------------